28 February 2013 17:37 [Source: ICIS news]
LONDON (ICIS)--The European polyethylene terephthalate (PET) market is waiting for March contract news from the upstream paraxylene (PX) and monoethylene glycol (MEG) industry, in what is a turbulent time for exchange rates, sources said on Thursday.
The market is suffering from "pure knee jerk reactions," when it comes to the euro/US dollar exchange rate volatility, according to a PET producer. ?xml:namespace>
The PX contract price in dominant Asia was settling down $15/tonne (€11/tonne) from February to $1,670/tonne CFR (cost and freight) Asia in March. This is the first decrease of the year, yet the weak euro could still result in an increase for PX in euro terms.
"There is no opportunity to relax," the producer added.
February MEG contracts are yet to be fully agreed at the initial €1,105/tonne FD (free delivered) NWE (northwest Europe). The price includes compensation for sellers, and now buyers say it is their turn to get compensation in March.
"We are looking towards a substantial decrease in March [the] MEG European contract price, to reflect the Asian decrease suitably," a contract buyer of MEG said.
Asian spot MEG prices collapsed by 6-8% in two days this week.
A second MEG buyer said it was expecting a €15-20/tonne decrease on MEG contracts from February to March, adding that without the ethylene increase, MEG should have dropped by €30-40/tonne.
A €50/tonne increase in the cost of feedstock ethylene is one argument European MEG producers are using to support the idea of a higher price in March.
"I see an increase [on March MEG] based on increased costs, asian prices more or less similar to jan level if you take feb ave and and slightly increasing spot values in Europe," a producer of MEG said, adding that availability of MEG and upstream ethylene oxide (EO) was tightening and spot MEG had rebounded.
"I don't believe [prices] can go down on PET. It is highly pressured. We will be lucky if raw materials rolled over," a second PET producer said.
A PET customer countered this by saying, "it's not only feedstock prices that are falling, but PET also," referring to import prices.
February PET prices were mostly at €1,310-1,330/tonne FD Europe, sources agreed.
"Nobody says the market is doing well. We are at unsustainable levels," a third PET producer said.
($1 = €0.76)
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